cryptocurrency

Beginners Guide on Derivatives of Cryptocurrency Ecosystems – The Coin Republic


  • The cryptocurrency ecosystem is filled with a large number of financial services and products. Some of the more popular among these offerings are crypto derivatives. an>
  • In the world of finance, a futures contract is a legal agreement to sell or buy a specific commodity asset or security at a pre-decided price at a particular time in the future.
  • A special kind of Futures Contracts, Perpetual Contracts unlike the traditional form of futures, don’t have an expiry date.

Cryptocurrencies are developing at an unfathomable pace and many people around the world, analysts, traders, developers, brokers and so on believe that it is the future of the World Economy. Decentralised Money transfer will change the financial status quo of the world and make it much simpler to get services like trading, loans, money transfer, etc.

One of the most interesting developments in the crypto world has been crypto ecosystems. The cryptocurrency ecosystem is filled with a large number of financial services and products. Some of the more popular among these offerings are crypto derivatives. 

The First Derivative– Futures Contract

In the world of finance, a futures contract is a legal agreement to sell or buy a specific commodity asset or security at a pre-decided price at a particular time in the future. Quite similarly, in the series of a  bitcoin futures trade, two sides commit to buying or selling BTC on a specified date for a predetermined amount.

A major difference between the both is that crypto futures contracts are more than merely a wager on an underlying asset. Crypto Future contracts also present a valuable hedging opportunity.

The Second Derivative- Perpetual Contract

A special kind of Futures Contracts, Perpetual Contracts unlike the traditional form of futures, don’t have an expiry date. When perpetual contracts are being exchanged, a trader should be informed about the several mechanics of the market.

The key components a trader needs to be aware of are Position Marking, Initial and Maintenance Margin, Funding and Funding Timestamps. Perpetual Contracts are a very good alternative and are considered to be the ace of contracts.

The Third Derivative- Options Contract

In the language of Finance, An option is a contract that allows but doesn’t force an investor to sell or buy an underlying commodity or a product like security, Exchange-Traded Fund or index at a certain price over a certain period of time.

Although, options contracts are not like stocks since they do not represent ownership in a company. 



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